Bloomberg News

Renault Starts Modular Production With Nissan in Cost-Cut Drive

June 19, 2013

Renault SA (RNO), France’s second-biggest carmaker, is introducing a modular-production strategy with Japanese partner Nissan Motor Co. (7201) as the manufacturers work to reduce spending by building more vehicles in common.

The common module family technology will help the carmakers cut engineering and process costs 30 percent to 40 percent and spending on parts 20 percent to 30 percent by 2020, Jean-Michel Billig, executive vice president of engineering and quality, said at a press conference today.

“Our aim is to cut the number of our suppliers globally as we develop our product line at the international level,” Billig told reporters at Renault headquarters in the Paris suburb of Boulogne-Billancourt.

European carmakers are under increasing pressure to keep costs down as they push into growth markets such as China, Brazil and Russia to reduce reliance on their shrinking domestic economies. Renault and Yokohama-based Nissan have had a sales and manufacturing partnership since 1999, while Turin, Italy-based Fiat SpA (F) is increasingly using common components with Chrysler Group LLC, the U.S. auto producer it controls.

Renault and Nissan vehicles will share about 50 percent of parts by 2020 through the new strategy, Billig said. The setup will help the French company maintain research and development spending at current levels of 8 percent to 9 percent of full-year revenue, he said.

The technology, in which suppliers provide larger components made of smaller parts that were previously installed separately, will be introduced this year and next on production of the the partners’ compact and larger models. That represents 1.6 million vehicles annually and 14 models for the Renault-Nissan alliance, Billig said.

The module program will be expanded to the companies’ subcompacts in 2015 and to their city cars in 2016, he said.

The first models built under the new system will be the next versions of Nissan’s Rogue, Qashqai and X-Trail sport-utility vehicles coming on the market in 2013 and Renault’s Espace mid-size car being introduced in 2014, Billig said.

To contact the reporter on this story: Mathieu Rosemain in Paris at mrosemain@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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